Attorney for Broward Health Warned District Officials About Legal Exposure a Day Before He Was Fired

South Floridians reside in one of the nation's most expensive health-care markets, in a state rated among the nation's worst for uninsured patients. Yet the North Broward Hospital District is the picture of financial health -- at least judging by the presentation made by accountants for the $1 billion health-care system at last month's meeting of the Board of Commissioners.

But public records suggest the district sits on shaky legal ground -- it may be violating federal laws that are designed to keep down health-care costs.

That's the subject of a memo that Broward Health General Counsel Marc Goldstone gave to commissioners and executive staff on May 13. The next day the commissioners met for an emergency meeting in which they decided Goldstone should be fired.

Whether Goldstone's dismissal was a direct response to his efforts to get the district into compliance with federal law, or whether it was truly for the reasons that commissioners claimed in that meeting, is anyone's guess. Nor is it possible to know whether violations of law play a major role in driving up local health-care costs.

But there's no over-estimating the catastrophic potential to the district. Broward Health may be in danger of severe punishment by federal regulators.

Judging by the memo, which you can see here, Goldstone worried that the $1 billion hospital district could not defend itself against a lawsuit or against charges it is violating the Stark Statute.

That law bars doctors from referring Medicare and Medicaid patients to facilities with which those doctors have a financial relationship. In the case of a public hospital district like Broward Health, it guards against the referring doctor's temptation to order unnecessary treatments and clinical tests at taxpayer expense.

But over the years, Stark has been broadened. It's also now illegal for a health care system to pay its contracted physician any thing of value that is beyond fair market value -- a crucial term. This aims to prevent a bidding war by which competing health care systems try to sweeten the contract terms for a physician whose presence will bring lots of patients into the system. Since those sweeteners -- or bribes, if you want to be more blunt -- would become an added expense for that health-care system, the cost of over-paying for a sought-after physician would be passed to consumers.

Those sweeteners can take a variety of forms. For instance, among the requirements of physician specialists who contract with the district is the obligation to be on-call for a certain period of the week -- that is, available to advise staff or stop by the hospital for an emergency in which their skills are needed. The precise terms of those call requirements are negotiable, but if they're more favorable terms than fair market value, that's a potential Stark violation, as well as anti-kickback statutes. In the May 13 memo, Goldstone writes that some of the agreements with physicians are "inconsistent" with fair market value. "Risk is high," wrote Goldstone, "and liability is high if a problem is discovered."

The "PPUC Agreements" on the first page of the memo refers to another stipulation of contracts between the district and its physicians: namely, how they're to be paid for giving care to uninsured patients. The cost of that care is paid by property taxes -- a couple hundred million annually in Broward Health's case. Under Stark, doctors are usually required to have a contract in place before they treat indigent patients. And that contract must be for at least a year, during which time its terms are not to be altered. Goldstone's memo suggests the district violates each of those rules.

Yet another problem area: discharge summaries; that is, the physician's documenting a patient's treatment for the sake of record-keeping and coordinating care between physicians. According to Goldstone's memo, the district pays for this service. Emails obtained through a public records request reveal that in Goldstone's last week at Broward Health he consulted with a colleague about this practice, expressing concern "from a fraud and abuse perspective."

That colleague, James de Glee of Tenet Healthcare's Fort Lauderdale office, agreed with Goldstone's analysis, opining that discharge summaries are "included in what the physician is paid for care of the patient, so he should either provide the service personally or pay for it." In other words, the district is allegedly assuming a chore that doctors are already paid to do themselves.

Reached by phone today, deGlee said he "vaguely" recalled a "collegial discussion" with Goldstone but he was not inclined to revisit the subject or to elaborate on whether Broward Health's handling of discharge summaries violated Stark.

But Goldstone's memo says it's cut and dry, that Broward Health's own compliance department forbids the practice, which he adds is "likely problematic under Stark and AKS" -- anti-kickback statute.

If Goldstone's fears are warranted, the potential penalties are astronomical. Stark holds that a health-care system cannot bill for any service referred by a physician with whom it is found to have committed a single Stark violation. If the discharge summaries are found to be in violation of Stark, for example, each one comes with a $15,000 civil penalty, meaning it could be multiplied across thousands of patients.

To defend itself against that kind of action, the district would have to rely on its corporate records in hopes that they show good faith to the feds. But that brings up yet another problem. "Our corporate record books are non-existent," says Goldstone in the memo, adding, "If we had a tax investigation we would would be hard-pressed to defend ourselves without such records."

In connection with the Goldstone memo, I requested interviews with the district's acting general counsel, Sam Goren, as well as with Mike Fernandez, chairman of the district's board of commissioners. Sara Howley, a spokeswoman for Broward Health, gave only a brief statement in response:

We have no one available for comment on this. You should know that we have an active compliance program and all compliance concerns are taken seriously and addressed promptly.

At the May 13 meeting, commissioners claimed that Goldstone had misled them as to how he'd become licensed to practice law in Florida. For more on the intrigue surrounding the termination of Goldstone and his associate general counsel, Joe Truhe, see this post from last month.